Correlation Between Goldman Sachs and Champlain Mid

Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Champlain Mid at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Goldman Sachs and Champlain Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Goldman Sachs Growth and Champlain Mid Cap, you can compare the effects of market volatilities on Goldman Sachs and Champlain Mid and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Goldman Sachs with a short position of Champlain Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Champlain Mid.

Diversification Opportunities for Goldman Sachs and Champlain Mid

0.97

Correlation Coefficient

Goldman Sachs  Champlain Mid

Almost no diversification

The 3 months correlation between Goldman and Champlain is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Growth and Champlain Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Mid Cap and Goldman Sachs is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Goldman Sachs Growth are associated (or correlated) with Champlain Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champlain Mid Cap has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Champlain Mid go up and down completely randomly.

Pair Corralation between Goldman Sachs and Champlain Mid

Assuming the 90 days horizon Goldman Sachs Growth is expected to under-perform the Champlain Mid. In addition to that, Goldman Sachs is 1.49 times more volatile than Champlain Mid Cap. It trades about -0.08 of its total potential returns per unit of risk. Champlain Mid Cap is currently generating about -0.09 per unit of volatility. If you would invest  2,294  in Champlain Mid Cap on December 30, 2024 and sell it today you would lose (133.00) from holding Champlain Mid Cap or give up 5.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Goldman Sachs Growth  vs.  Champlain Mid Cap

Goldman Sachs Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Champlain Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Champlain Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Champlain Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Goldman Sachs and Champlain Mid

The main advantage of trading using opposite Goldman Sachs and Champlain Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Champlain Mid can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Champlain Mid will offset losses from the drop in Champlain Mid's long position.

The idea behind Goldman Sachs Growth and Champlain Mid Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.